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Dumping the Face, and Founder, of Men’s Wearhouse

June 19, 2013 by Leave a Comment

The clothing retailer announced on Wednesday that it had fired Mr. Zimmer, who started the company in 1973, as executive chairman. For three decades, he had starred in its commercials, telling customers, “You’re going to like the way you look. I guarantee it.”

A disagreement between Mr. Zimmer and the board appeared to be the reason for the sudden dismissal, though it was not immediately clear what that disagreement was. Some analysts suggested that the conflict might be over the company’s efforts to appeal to younger customers, which could have been hampered by Mr. Zimmer’s continued presence in ads.

“Over the past several months I have expressed my concerns to the board about the direction the company is currently heading,” Mr. Zimmer said in a statement provided to CNBC. “Instead of fostering the kind of dialogue in the board room that has in part contributed to our success, the board has inappropriately chosen to silence my concerns through termination as an executive officer.”

The company gave no reason for Mr. Zimmer’s dismissal in its statement. A spokesman for the company declined to comment.

Showing just how abrupt the decision was, Mr. Zimmer’s firing was announced the same day as a scheduled shareholders’ meeting, which has been postponed “to renominate the existing slate of directors without Mr. Zimmer,” the company said Wednesday. The board released a statement Wednesday saying it “fully supports C.E.O. Doug Ewert and his management team.”

The company has more than 1,100 stores nationally, under the flagship Men’s Wearhouse brand along with Moores and KG. The stores primarily sell suits and rent tuxedos.

Financially, it has been performing solidly, with sales increasing 5.1 percent in the quarter ended May 4 to $616.5 million. Sales for 2012 were $2.5 billion, up 4.4 percent, with profits rising to $2.55 a share from $2.30 a share.

Mr. Zimmer, 64, had been easing out of a leadership role at the company recently.

“He had been managing a transition, I thought, very effectively the last two years,” said Richard Jaffe, an analyst with Stifel Nicolaus. In 2011, Men’s Wearhouse promoted Mr. Ewert to succeed Mr. Zimmer as chief executive, and recently hired the designer Joseph Abboud as creative director along with a new chief financial officer. Perhaps Mr. Zimmer “was reluctant to give up the reins,” he said.

Mr. Jaffe suggested that advertising might have split Mr. Zimmer and the board. The company has been trying to appeal to millennials, and has been evaluating whether Mr. Zimmer’s appearance in the advertisements resonates with younger shoppers, Mr. Jaffe said.

“They continually rework it, adjusting how much presence do we have on George. Does he stand? Does he sit? But it’s always all about George Zimmer — his voice, his physical presence,” he said. “An old guy with a gray beard may not provide credibility to the product in the eyes of a 22- or 24-year-old.”

Jerome Reisman, a partner with Reisman Peirez Reisman Capobianco in Garden City, N.Y., said it was irresponsible of the company to be so vague about the reasons for Mr. Zimmer’s departure.

“When you are a public company, when you have shareholders, when you report to the media, you have a duty to disclose the cause of any major material termination,” he said. “Zimmer, at all times, was the poster boy for this company — what Frank Perdue was to Perdue Chickens, what Tom Carvel was to the Carvel Ice Cream Company.”

The lack of details spawns speculation, Mr. Reisman said: “Is there more behind all of this? Is there a reason for shareholders to have fear? And the last thing you want from public shareholders is fear and the unknown.”

In its statement, the company said the board expected “to discuss with Mr. Zimmer the extent, if any, and terms of his ongoing relationship with the company.”

Mr. Jaffe said he did not expect Mr. Zimmer’s departure to affect the company, given the succession plan Mr. Zimmer had already put in place. The company maintains the legal right to his image and 500 hours of film of Mr. Zimmer, Mr. Jaffe said in a note to clients.

Men’s Wearhouse stock was down 1.2 percent, to $37, at the close of trading.

Article source: http://www.nytimes.com/2013/06/20/business/dumping-the-face-and-founder-of-mens-wearhouse.html?partner=rss&emc=rss

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Media Decoder Blog: TV Puppeteer at Center of Controversy Quits in Puerto Rico

January 9, 2013 by Leave a Comment

8:35 p.m. | Updated

The television personality who plays La Comay, a Puerto Rican puppet that started a media firestorm in November over comments on the air that concerned the death of a publicist, has resigned.

Antulio Kobbo Santarrosa, resigned Tuesday from WAPA Television, an independent network in Puerto Rico. He left after new guidelines were put in place to manage the content of the show, called “SuperXclusivo,” including recording it before its 6 p.m. broadcast time and staying away from offensive language.

Mr. Santarrosa’s contract includes a clause that prohibits “tortuous, illegal, obscene, offensive or distasteful remarks or conduct in connection with the shows.”

He and his sidekick on the show, Héctor Travieso, walked out of the studio after a disagreement with the network’s president, Jose E. Ramos, said a person with direct knowledge of the incident who was not authorized to speak publicly.

Mr. Ramos declined to comment.

The show, one of the island’s most popular, resumed production on Monday after a holiday break. After Mr. Santarrosa and Mr. Travieso left, the network replayed Monday’s episode.

In a statement posted to its Web site Wednesday, the network apologized to viewers, saying that Mr. Santarrosa had walked out “without consulting WAPA management.”

“SuperXclusivo,” which is broadcast five days a week from 6 to 7 p.m., a critical time slot for the network, was suspended indefinitely. The network said it would broadcast movies instead this week.

Calls for a boycott of the show began after La Comay (roughly translated as the Godmother) asked whether the publicist, José Enrique Gómez Saladín, 32, who was murdered in November, had been “asking for this.” In recent weeks, the show lost prominent advertisers, like Walmart and ATT.

The puppet was created by Mr. Santarrosa. “SuperXclusivo” has been on WAPA, which is owned by the private equity firm InterMedia, since 1999.

Mr. Santarrosa has had shows with similar characters on other networks, including Telemundo. It was unclear Wednesday whether Mr. Santarrosa would take the puppet to another network.

Tanzina Vega writes about advertising and digital media. Follow @tanzinavega on Twitter.

Article source: http://mediadecoder.blogs.nytimes.com/2013/01/09/controversial-puppeteer-resigns-in-puerto-rico/?partner=rss&emc=rss

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E.U. Finance Ministers Deadlock on Plan to Oversee Banks

December 4, 2012 by Leave a Comment

The ministers agreed to reconvene next week, a day ahead of a summit meeting of European Union leaders who had been hoping to focus discussion on the design of a banking union — something the leaders agreed last summer to establish as a way to safeguard the industry after member countries racked up enormous debts bailing out their banks.

That agreement in June had called for setting up the single regulator under the European Central Bank. And the bloc’s administrative arm, the European Commission, has proposed phasing in the system beginning Jan. 1.

But the deadlock on Tuesday indicated that there was sharp disagreement among member states over how many banks in the euro currency union should be covered by the new system; how to ensure that countries outside the currency union have a way to rebuff regulations they dislike; and how to ensure that the European Central Bank would keep monetary policy separate from its decisions on bank supervision.

After ministers failed to reach agreement Tuesday during their regular monthly meeting, Vassos Shiarly, the finance minister of Cyprus, the country holding the Union’s rotating presidency, set another session for Dec. 12.

If ministers fail to reach agreement at that meeting, the E.U. leaders will arrive at their summit meeting the following day without a cornerstone in place for the banking union. One of the goals for the union could eventually be to issue debt jointly backed by euro zone countries, as a way to buffer the sort of interest rate spikes that have often bedeviled weaker countries, including Spain.

Some ministers warned on Tuesday that further delays in designing the banking union could lead to a return of acute financial pressures in the euro zone. “If we are not able to deliver in the dates we have committed, this will not be neutral in terms of the stability of the markets,” said Luis de Guindos, the Spanish economy minister.

For Spain, stricter supervision was supposed to be the condition for using European funds to bail out its troubled banks directly and a way to avoid accumulating more sovereign debt. Once the supervisor is in place, Spain wants the money it is drawing upon for its bailout to be moved off its government ledgers.

But France and Germany remained divided over the new banking rules on Tuesday. That is a significant obstacle because agreement between the two countries usually is needed to accomplish major reforms in Europe.

Pierre Moscovici, the French finance minister, told the meeting that the new rules should apply to all lenders rather than lead to a two-tier system.

Chancellor Angela Merkel of Germany has suggested that the system could eventually apply to all 6,000 banks in the euro zone. But some German officials and industry groups would rather have the new centralized oversight apply only to the biggest European banks, and leave regulation of the country’s smaller savings banks in the hands of national officials.

French officials have stressed the need for a system that covers all euro zone banks. Otherwise, the French have warned, any sudden intervention by the E.C.B. into the affairs of a bank under national regulation could raise alarm among investors and depositors and even lead to bank runs.

But Wolfgang Schäuble, the German finance minister, said Tuesday that trying to give too much central authority to a new banking regulator would meet stiff political opposition in his country.

“I think it would be very difficult to get an approval by the German Parliament if you would leave the supervision for all the German banks to European banking supervision,” Mr. Schäuble told the meeting. “Nobody believes that any European institution will be capable to supervise 6,000 banks in Europe.”

The government in Berlin has complained that overly rapid implementation of the rules could lead to regulatory loopholes. German state governments also have balked at giving the central bank oversight of their sparkassen, the hundreds of small and midsize savings banks that do much of the lending to consumers and small businesses.

Germany also refused to support one of the main British demands: new voting rules to ensure that lenders based in London continue to be regulated by Britain.

Yet another concern for Mr. Schäuble was whether placing so much supervisory power within the European Central Bank could lead the central bank to compromise its decisions on monetary policy — if, for example, the E.C.B. were setting interest rates while also trying to oversee politically sensitive issues like bank bailouts.

“In the long run, you will damage the independence of the central bank,” Mr. Schäuble told the meeting.

Germany is the biggest financial contributor to the European Union, and establishing the single supervisory system could oblige Ms. Merkel to dip into the treasury to help prop up weaker European banks, like many of those in Spain. Such aid could be an issue for German taxpayers, ahead of national elections in their country next September. German citizens have already grown weary of paying most of the bill for bailouts, and they are wary of using more money to help banks in vulnerable southern European countries.

Another issue to be resolved in coming weeks will be the leadership of the group of ministers who oversee the euro area.

Jean-Claude Juncker, who has been the group’s president since 2005, reiterated at a news conference Monday night that he would step down at the end of this year or at the beginning of next year.

But he declined to signal his preference for any particular successor to the post, which gives the holder significant power over the agendas of their meetings.

Article source: http://www.nytimes.com/2012/12/05/business/global/daily-euro-zone-watch.html?partner=rss&emc=rss

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Greek Talks Stumble Over Interest Rates

January 22, 2012 by Leave a Comment

LONDON — Talks between Greece and its private-sector creditors over restructuring its debt hit a snag over the weekend over how much of an interest rate the new bonds would pay.

While considerable progress has been made, Greece’s financial backers — Germany and the International Monetary Fund — have been unyielding in their insistence that the longer term bonds that would replace the current securities must carry yields in the low 3 percent range, officials involved in the negotiations said on Sunday.

Bankers and government officials say they still expect a deal to get done; Greece and its private-sector creditors on Friday appeared close to a deal that would bring the yield to below 4 percent. But the continuing disagreement over the interest rate is a reminder of just how complex and politically sensitive it is to restructure the debt of a euro zone economy.

Greece’s private creditors, who hold about 206 billion euros in Greek bonds, are resisting accepting a lower rate. They argue that they are already faced with a 50 percent loss on their existing bonds and that the lower rate would increase the hit they would take.

It would also make it more difficult to describe the deal as voluntary. A coercive deal, bankers warned, could lead to a technical default and the triggering of credit-default swaps, or insurance, an outcome that all sides were trying to avoid.

The bonds’ rate “is the only issue,” said a senior official directly involved in the negotiations. “We have to accommodate the needs of the Greek economy.”

Talks broke off over the weekend when Charles H. Dallara, the managing director of the Institute of International Finance, a bankers group that is representing private-sector bondholders, left Athens. In a statement, a spokesman for the I.I.F. said that Mr. Dallara had a previously planned personal engagement in Paris and that progress was being made with regard to securing an agreement.

During an interview broadcast Sunday on the Greek television Antenna, Mr. Dallara emphasized that creditors were insisting on 3.8 percent to 4 percent. “This is certainly the maximum offer that is consistent with the voluntary debt exchange,” he said. “It is largely in the hands of the official sector to choose the path — a voluntary debt exchange or a default.”

With the Greek economy forecast to shrink by 6 percent this year and 3 percent next year, the ultimate goal of Greece lowering debt to 120 percent of gross domestic product by 2020 is seeming more and more unrealistic. With G.D.P. plummeting, the I.M.F. is insisting that Greece’s debt load — currently 160 percent of GDP — be reduced more quickly and that the private sector pay its fair share.

Bankers say that the fund has been demanding a coupon rate of below 3.5 percent for bonds maturing by 2014. Over subsequent years, the rate would escalate to 4 percent and above as the economy improved.

A majority of the funds the I.M.F. has disbursed so far has been paid out to Greece’s bondholders as opposed to helping Greece itself. Of the close to 20 billion euros that the fund has so far disbursed, two-thirds has gone to pay back bondholders — an increasing number of whom have been hedge funds betting that this trend will continue.

A debt restructuring agreement is a precondition for Greece to receive its next installment of aid from Europe and the I.M.F., 30 billion euros that the country needs to stave off bankruptcy. European Union finance ministers were to resume talks Monday on solutions to the region’s debt crisis.

To be sure, getting Greece and its bankers to agree on a deal to restructure 200 billion euros in debt was never going to be easy, given the many different constituencies involved. And bankers say there are a number of other important technical issues that also must be ironed out, from what kind of collateral would be used to back the new bonds to how long their maturities would be.

Also holding up discussions was the question of what to do about the European Central Bank’s 55 billion euros in Greek bonds. The E.C.B.’s refusal to take a loss has been regularly cited by investors as unfair, and many have said that they will sue Greece if they have to take a loss while the E.C.B. does not.

To get around this, official are now discussing the possibility that Europe’s rescue fund might lend money to Greece to allow it to buy the bonds back from the E.C.B. at the price the central bank paid for them — thought to be about 75 cents on the euro.

The E.C.B. would then not have to take a loss on these holdings. By selling them back to Greece, it would remove itself as an obstacle to a broad restructuring agreement.

“Both sides know that a deal has to get done,” said a banker who asked not to be identified because he was closely involved in the talks. “But they have to dance this dance to get there.”

Separately, the German magazine Der Spiegel reported that Italian Prime Minister Mario Monti was pushing for an increase in the European bailout fund to 1 trillion euros. That would be more than double the amount that the European Financial Stability Facility is authorized to lend to troubled euro zone countries.

A German government official, who was not authorized to be quoted by name, said Sunday that Germany had received no formal request from Italy to increase the fund. In any case, he said, Germany would be opposed to an increase now.

Germany’s position remains that the way to reduce borrowing costs is for euro zone countries to take steps to reduce debt and remove impediments to economic growth. Recent declines in borrowing costs for Spain and Italy show this is the most effective policy, the German official said.

“We don’t see the need for additional funds,” he said. “It’s not the way to reduce financing costs. You need to do the reforms.”

A spokeswoman for the Italian government had no official comment on the Spiegel report. Mr. Monti has been on record in recent weeks calling on Europe to increase the “firewall” of bailout money available to lend to vulnerable economies.

Jack Ewing contributed reporting from Berlin. Niki Kitsantonis and Rachel Donadio contributed from Athens.

Article source: http://feeds.nytimes.com/click.phdo?i=366a3627970a4dccb0462c9ea0ae664e

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Divisions at Federal Reserve Led to Rate Compromise

August 31, 2011 by Leave a Comment

At their meeting this month, Federal Reserve policy makers were in strong disagreement, with some advocating aggressive options to stimulate the economy and others pressing to do nothing, according to minutes released on Tuesday.

At the time of the Aug. 9 meeting, the Fed disclosed three dissenting votes — unusual given that most decisions are reached by consensus — but it was not known until Tuesday that there was such a broad array of disagreement and such vigorous debate about the options.

In the end, the Federal Open Market Committee took a middle ground, agreeing to keep interest rates near zero through mid-2013.

In addition to debate about the Fed’s approach to aiding the recovery, the meeting was dominated by sobering assessments of the economy’s disappointing performance this summer and downgrades for growth in the next few months. Since the meeting, the government reported that the economy expanded only 0.7 percent in the first six months of the year.

The meeting minutes for the most part do not identify the members or their views. But some members wanted to engage in another round of so-called quantitative easing, or huge asset purchases, which has become a charged topic in the Republican presidential primary campaign. Some wanted merely to change the composition of the assets the Fed already has. Some wanted to reduce the interest rate the Fed pays banks for their excess reserve balances.

And some wanted to do nothing.

“Some participants judged that none of the tools available to the committee would likely do much to promote a faster economic recovery,” the minutes said.

This broad array of proposals may shed some light on why Ben S. Bernanke, the Fed chairman, spent so much of his long-awaited speech last week in Jackson Hole, Wyo., talking about what Congress, rather than the Fed, should do to help the economy: because even within the Fed there is no consensus on the correct course.

At the Aug. 9 meeting, the members ultimately decided to stretch out their next gathering, in September, to a two-day meeting in part because there was so much disagreement, and Fed officials wanted more time to debate their options.

Officials also came to a temporary policy compromise by giving markets clearer guidance on how long interest rates would continue to hover around zero. Some committee members said they wanted to set a calendar deadline, and others preferred to instead peg interest rates to a specific rate of unemployment or inflation.

The calendar-deadline version won out, and in its public statement the Fed pledged to keep its benchmark short-term interest rate at “exceptionally low levels,” for “at least through mid-2013.”

There were three dissenters: Richard W. Fisher, Narayana Kocherlakota and Charles I. Plosser.

Not only did they disagree with the mid-2013 language, they all disagreed for slightly different reasons.

Mr. Fisher said he did not think further monetary easing would do much, since he “felt that it was chiefly nonmonetary factors, such as uncertainty about fiscal and regulatory initiatives, that were restraining domestic capital expenditures, job creation and economic growth.”

Mr. Kocherlakota said he did not believe more easing was appropriate because unemployment had fallen and inflation had risen over the previous year.

And Mr. Plosser worried that the “until at least mid-2013” language might indicate that the Fed’s actions were “no longer contingent on how the economic outlook evolved,” that the Fed’s outlook was “excessively negative” and that the measure would be ineffective at stimulating growth in any case.

The minutes also said that policy makers had expected economic conditions over the summer to have been much better than they turned out and that the Fed was downgrading its projections for economic growth for 2011 and 2012.

Even though some temporary factors might be weighing down the economy, the minutes said, there was worry that “the underlying strength of the economic recovery remained uncertain.”

The participants at the recent Fed meeting did not believe the economy was on the brink of another recession, but some unnamed members indicated that, “with the recovery still somewhat tentative, the economy was vulnerable to adverse shocks.”

Fed officials voiced particular concern about “a deterioration in labor market conditions,” and debated what the longer-term consequences of such high and sustained levels of unemployment might be.

Staff members slightly raised their forecasts for inflation for the rest of this year, indicating that the central bank might be especially unlikely to engage in another round of major asset purchases. These purchases generally raise prices, and the Fed has previously engaged in such quantitative easing in part because policy makers worried that prices might otherwise start falling.

Article source: http://feeds.nytimes.com/click.phdo?i=f53c53618e6514734da130ec389d9fda

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